An accurate model of electric arc furnaces (EAFs) is required to analyse their impact on the system's power quality. One of the well‐known approaches to model EAF is using the power balance equation. This model has two terms, each one has a coefficient named the model parameter. Also, both terms are powered to values, which are called model orders. So, the model includes two model parameters and two model orders. Model orders highly affect the modelling precision. The optimum model orders have not been obtained yet in previous studies. Here, based on many actual records from EAFs, the best model orders for refining, melting, and scrapping stages are attained. Unlike the original power balance equation which has constant model parameters, the first proposed model uses the attained optimal model orders with the time‐varying model parameters. In the second proposed model, the model orders are also considered time‐varying. Model parameters, which are updated every 10 ms, are obtained using autoregressive moving average (ARMA) models. The correctness of the models is assessed by calculating some important electric quantities using the actual data and the proposed models. Finally, the time‐varying parameters are generated using two MATLAB codes.